American and United and Continental airlines and their U.S. trade association are challenging the EU’s limits on greenhouse gas emissions.

Credit: Newscom

Plantiffs

American and United and Continental airlines and their U.S. trade association are challenging the EU’s limits on greenhouse gas emissions.

Credit: Newscom

An international fight is brewing over how far the European Union, a world leader in curbing emissions related to human-induced climate change, can go in controlling greenhouse gases from airplane exhaust. The fight revolves around an EU law capping emissions from aircraft, which emit carbon dioxide when burning jet fuel. The law, called a directive, applies to flights that originate or land in the EU, regardless of where the airlines are based.

The looming clash is pitting the EU against more than two dozen other countries, including the U.S. and China. The future of this clash depends in large part on the outcome of a lawsuit pending before the European Court of Justice. The case questions whether the EU action violates a long-standing worldwide aviation treaty.

Put in place in 2008, the directive expands the EU’s cap-and-trade system for greenhouse gases to include emissions from aircraft. The trading system, established in 2003, thus far has applied only to land-based installations such as power plants and manufacturing facilities.

The directive limiting the amount of greenhouse gases that airlines are allowed to release is set to take effect on Jan. 1, 2012. It requires airlines to have emission allowances to cover the greenhouse gases released during flights that take off or land in the EU. The EU will give airlines 85% of the allowances they will need, on the basis of an average of their emissions over the period 2004–06. Airlines can purchase the remaining 15% of the allowances at auction.

But airlines do not necessarily have to purchase allowances. Environmental groups point out that airlines have options for meeting the EU emissions cap that create little cost to their passengers.

One way to avoid purchasing allowances is to use biofuels, says Sarah Burt, a staff attorney with Earthjustice, a U.S. environmental organization. She adds that airlines can also reduce their need for allowances by becoming more fuel efficient. Plus, carriers can sell any of the allowances they get for free but end up not needing to use.

For airlines that do need to buy allowances, the pass-through cost is expected to be minimal. For example, under the directive, the cost of a New York to Brussels flight is likely to increase by less than $3.00 in 2012, and around $6.00 in 2020, according to calculations by the Environmental Defense Fund, another U.S. activist group. This increase would “be lost in the noise” of fluctuating airline ticket prices, says Keith Allot, head of climate change for WWF-UK, an organization that is part of the international World Wide Fund for Nature.

But in their legal case, filed in 2009, airlines aren’t arguing about the price of compliance. They are focusing on whether the EU has the authority to regulate airplane emissions from non-EU airlines.

The Air Transport Association, which is a trade group of major U.S. airlines, and some of its member companies filed suit against a U.K. statute that implements the EU directive. The airlines and their association argued that the EU law violates a 1944 treaty that provides every country with jurisdiction over its own airspace. That accord is known as the Chicago Convention.

The British court hearing the airlines’ suit referred the case to the European Court of Justice, seeking a determination on whether the EU directive breaches international aviation agreements. The EU court is expected to render a decision by early 2012.

Earlier this month, European Court of Justice Advocate General Juliane Kokott issued an opinion that the EU emission trading directive is compatible with international aviation treaties. The European Court of Justice will consider her opinion as it deliberates the case.

Specifically, Kokott found that the directive gibes with the Chicago Convention and the EU-US Open Skies Agreement. The latter is a 2007 treaty that allows any U.S. air carrier to fly to any point in the EU and any EU airline to fly to any place in the U.S.

If the directive had excluded non-EU carriers from the emissions cap, Kokott wrote, “those airlines would have obtained an unjustified competitive advantage over their European competitors.”

Moreover, Kokott determined that the EU emissions trading system is not a fee or other charge, which would violate international aviation agreements. Instead, she found that the system is a market-based measure targeting greenhouse gas emissions and is not aimed at fuel, passengers, or cargo.

Kokott’s findings are an indicator—but not a guarantee—that the full 13-judge European Court of Justice may come down in favor of the law when it issues its final ruling, says Pamela Campos, an attorney with the Environmental Defense Fund.

The Air Transport Association notes that Kokott’s findings constitute a nonbinding preliminary opinion. The organization holds hope that the court will decide differently from her. “In complex cases such as this one, it would not be unusual for the full court’s final opinion to vary from the preliminary opinion,” the airline association said in a statement. The bottom line is that it wants a single global system for controlling airline emissions.

The case has its roots in the aviation sector’s longtime resistance to regulation of its greenhouse gas emissions, environmental activists say. In 1997, when nations hammered out the Kyoto protocol, which the U.S. has never ratified, it required industrialized nations to cut their emissions by an average of 5% below 1990 levels for the five-year period 2008–12. But aviation interests lobbied hard for exclusion, and succeeded. So, the Kyoto pact directs countries to work out limits on emissions from aircraft fuels through the International Civil Aviation Organization (ICAO), a United Nations agency that coordinates and regulates international air travel.

For its part, ICAO has held discussions on limiting greenhouse gases from aviation. But those talks have shown little progress over the years, environmentalists say.

“The international community, aided and abetted by the airlines, has failed to make any progress on cutting aviation emissions in 14 years despite innumerable meetings and negotiating sessions,” says Bill Hemmings, program manager with Transport & Environment. This European nonprofit promotes transportation policies that are based on principles of sustainable development.

Meanwhile, U.S. airlines’ opposition to the EU directive is attracting supporters in Congress. A bill moving through the House of Representatives (H.R. 2594) would make it illegal for a U.S. airline to participate in the EU’s emissions trading program. Legislators are still working out the details, including how such a measure would be enforced.

Rep. John L. Mica (R-Fla.), chairman of the House Transportation & Infrastructure Committee, calls the EU directive “an arbitrary and unjust violation of international law that disadvantages U.S. air carriers and kills U.S. aviation jobs.” The Air Transport Association says the EU directive will cost U.S. airlines more than $3 million from 2012 through 2020.

Mica’s panel approved the bill in September. House leaders have not yet scheduled a vote on H.R. 2594, and it’s unclear at this point how much support the legislation would garner in the Senate.

In the meantime, international disapproval of the EU directive is coalescing. At the end of September, 26 countries—including the U.S., Canada, China, Brazil, Mexico, and India—adopted a declaration opposing the EU’s emissions limits on flights by non-EU airlines. The declaration was negotiated at a two-day meeting in New Delhi in which the EU was not involved. It reaffirmed the need for countries to work through ICAO to reduce emissions from aviation, according to a statement from the Indian Ministry of Civil Aviation.

A spokesman for ICAO tells C&EN that the EU emissions trading system is on the agenda for review in November at a meeting of the international organization’s council, which is its administrative body.

If the European Court of Justice agrees with Kokott and rules against the U.S. airlines, the opposition to the directive could move beyond the EU legal system. The U.S. and other governments could turn to ICAO as the ultimate arbiter of the international legality of the EU directive. The U.S. could also seek a settlement under the Open Skies Agreement.